No. 34
February 2014

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Burden of Proving Infringement in Declaratory Judgment Action Brought by Licensee Rests with Licensor Patentee: United States Supreme Court in Medtronic.
(Article by Kelly G. Hyndman, Sughrue Mion, PLLC, Washington, DC, United States)
On September 18, 2012, the United States Court of Appeals for the Federal Circuit (CAFC) ruled that, under certain circumstances, a patent licensee had a burden to prove non-infringement, instead of the patentee having to prove infringement (Medtronic Inc. v. Boston Scientific Corp., 695 F.3d 1266 (Fed. Cir. 2012). On January 22, 2014, a unanimous opinion authored by Justice Stephen Breyer in Medtronic, Inc. v. Mirowski Family Ventures, LLC, 571 U.S. _____ (2014) overruled the CAFC, removing this possible exception to the rule that a patentee always bears the burden of proving infringement.

In the United States, it has long been clear that a patent owner has the burden of proving infringement, even when the claim of infringement is made as a counter-claim in a declaratory judgment action.

In this particular situation, however, the license agreement underlying the dispute theoretically foreclosed the patentee from asserting such a counter-claim.

Here, Medtronic had a license, since 1991, for certain Mirowski patents. The dispute arose around whether certain new products of Medtronic came within the scope of the license. If any claims of the licensed Mirowski patents were readable upon the new Medtronic devices, then Medtronic would owe royalties to Mirowski. Otherwise, no royalties would be owed. Per the terms of the license agreement, whenever Medtronic and Mirowski disagreed in this regard, Medtronic would have to pay the disputed royalties into an escrow account and Medtronic would file a declaratory judgment action to have the question settled. The prevailing party in the action would then receive the escrowed royalty payments.

One of the special circumstances that complicated the analysis included the fact that Medtronic was a licensee of the patents; Medtronic had every right to use the patented technology under the existing license. Since Medtronic had a license to the patents, Medtronic could not as a strictly legal matter infringe them.

Therefore, at the time of the declaratory judgment action, Medtronic could properly file the action to ask for a determination that the claims did not cover the new devices, but Mirowski could not file a counter-claim for patent infringement by Medtronic.

Mirowski took the position that, since Mirowski could not bring a patent infringement counter-claim, the declaratory judgment plaintiff Medtronic therefore had the basic plaintiff's burden to prove that it deserved the relief it sought. This “normal default rule” was thought by Mirowski to require Medtronic to prove its devices were not covered by any Mirowski patent claim.

During oral arguments, Justice Antonin Scalia pointed out to counsel for Mirowski that “it is often the case, in declaratory judgment actions, that the defendant in the action cannot counterclaim.” Furthermore, Justice Scalia noted that the “whole purpose of the declaratory judgment statute is to enable you to sue before the other side has a cause of action against you”.

The Supreme Court concluded that, even though an infringement counter-claim could not be brought in this declaratory judgment action, the fundamental analysis to be undertaken was an infringement analysis, and that infringement must always be proven by the patent owner. Moreover, the Supreme Court found a number of factors that would disturb the patent system if certain cases required proof of non-infringement instead of requiring a patent owner to prove infringement in all situations.

A copy of the opinion is available at http://www.supremecourt.gov/opinions/13pdf/12-1128_h315.pdf.


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